Subject: Spare Parts Initial Provisioning Reference: a) Purchase Agreement No. 3427 (Purchase Agreement) between The Boeing Company (Boeing) and United Air Lines, Inc. (Customer) relating to Model 787-8 aircraft (Aircraft)
Exhibit 10.4
3427-07
United Air Lines, Inc.
XX Xxx 00000
Xxxxxxx, XX 00000-0000
| Subject: | Spare Parts Initial Provisioning | |
| Reference: | a) Purchase Agreement No. 3427 (Purchase Agreement) between The Boeing Company (Boeing) and United Air Lines, Inc. (Customer) relating to Model 787-8 aircraft (Aircraft) | |
| b) Spare Parts General Terms Agreement No. 22 (Spares GTA) between Boeing and Customer | ||
This letter agreement (Letter Agreement) is entered into on the date below and amends and supplements the Spares GTA. All capitalized terms used but not defined in this Letter Agreement have the same meaning as in the Spares GTA, except for “Aircraft” which will have the meaning as defined in the Purchase Agreement.
In order to define the process by which Boeing and Customer will (i) identify those Spare Parts and Standards critical to Customer’s successful introduction of the Aircraft into service and its continued operation, (ii) place Orders under the provisions of the Spares GTA as supplemented by the provisions of this Letter Agreement for those Spare Parts and Standards, and (iii) manage the return of certain of those Spare Parts which Customer does not use, the parties agree as follows.
1. Definitions.
“Bulk Material” means composites, tapes, sealants, oil, compounds, and miscellaneous materials as specified in the Maintenance Manual.
“Provisioning Data” means the documentation provided by Boeing to Customer, including but not limited to the Recommended Spare Parts List (RSPL), identifying all Boeing initial provisioning requirements for the Aircraft.
“Provisioning Items” means the Spare Parts and Standards identified by Boeing as initial provisioning requirements in support of the Aircraft, excluding special tools, ground support equipment (GSE) quick engine change (QEC) kits, engines and engine parts.
| P.A. No. 3427 | ||
| Spare_Parts_Initial_Provisioning | ||
| BOEING / UNITED PROPRIETARY | ||
United Air Lines, Inc.
3427-07
“Provisioning Products Guide” means the Boeing Manual D6-81834 entitled “Spares Provisioning Products Guide”.
“QEC Kit” means the necessary contained parts to build up a spare engine as supplied by the engine manufacturer to a line replaceable unit.
“Raw Material” means items such as miscellaneous extrusions, aluminum sheeting, rubber sheeting, tubing, honeycomb, wire, etc. that are likely to be consumed during general repair and line maintenance of the aircraft
“Standard Part” means expendable hardware items having a relatively high usage and application and is normally available from industrial supply outlets, includes such items as nuts, bolts, screws, fasteners, rivets, resistors, capacitors, diodes, etc.
2. Phased Provisioning.
2.1 Provisioning Products Guide. Prior to the initial provisioning meeting Boeing will furnish to Customer a copy of the Provisioning Products Guide.
2.2 Initial Provisioning Meeting. On or about [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] prior to delivery of the first Aircraft the parties will conduct an initial provisioning meeting, where the procedures, schedules, and requirements for training will be established to accomplish phased provisioning of Spare Parts and Standards for the Aircraft in accordance with the Provisioning Products Guide. If the lead time from execution of the Purchase Agreement until delivery of the first Aircraft is less than [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT], the initial provisioning meeting will be established as soon as reasonably possible after execution of the Purchase Agreement.
2.3 Provisioning Data. During the initial provisioning meeting Customer will provide to Boeing the operational parameter information described in Chapter 6 of the Provisioning Products Guide. After review and acceptance by Boeing of such Customer information, Boeing will prepare the Provisioning Data. Such Provisioning Data will be furnished to Customer on or about ninety (90) days after Boeing finalizes the engineering drawings for the Aircraft. The Provisioning Data will be as complete as possible and will cover Provisioning
P.A. No. 3427
Spare_Parts_Initial_Provisioning
BOEING / UNITED PROPRIETARY
United Air Lines, Inc.
3427-07
Items selected by Boeing for review by Customer for initial provisioning of Spare Parts and Standards for the Aircraft. Boeing will furnish to Customer revisions to the Provisioning Data [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] until approximately ninety (90) days following delivery of the last Aircraft or until the delivery configuration of each of the Aircraft is reflected in the Provisioning Data, whichever is later. Upon mutual agreement during the initial provisioning meeting, Boeing will make its representative available to support Customer’s Spare Provisioning activities related to major milestone events, starting with the initial implementation through the first heavy maintenance check for the first Aircraft. This will be accomplished by a combination of on site support at the Customer and/or dedicated focal at Boeing base upon the requirements and statement of work associated with the activity.
2.4 Buyer Furnished Equipment (BFE) Provisioning Data. Customer will provide or cause its BFE suppliers to provide to Boeing the BFE provisioning data in scope and format acceptable to Boeing, in accordance with the schedule established during the initial provisioning meeting. Boeing will [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].
2.5 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
3. Purchase from Boeing of Spare Parts and Standards as Initial Provisioning for the Aircraft.
3.1 Schedule. In accordance with schedules established during the initial provisioning meeting, Customer may place Orders for Provisioning Items and any GSE, special tools, QEC kits, or engine spare parts which Customer determines it will initially require for maintenance, overhaul and servicing of the Aircraft and/or engines.
3.2 Prices of Initial Provisioning Spare Parts.
3.2.1 Boeing Spare Parts. The Provisioning Data will set forth the prices for those Provisioning Items, that are Boeing Spare Parts, and such prices will be firm and remain in effect for ninety (90) days from the date the firm price is first quoted to Customer in the Provisioning Data. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
P.A. No. 3427
Spare_Parts_Initial_Provisioning
BOEING / UNITED PROPRIETARY
United Air Lines, Inc.
3427-07
3.2.2 Supplier Spare Parts. Boeing will provide supplier catalog prices in the Provisioning Data for Provisioning Items that are Supplier Spare Parts. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] The price to Customer for any Supplier Spare Parts that are Provisioning Items or for any items ordered for initial provisioning of GSE, special tools manufactured by suppliers QEC kits, or engine spare parts will be one hundred twelve percent (112%) of the supplier’s list price for such items.
4. Delivery.
For Spare Parts and Standards ordered by Customer in accordance with Article 3 of this Letter Agreement, Boeing will, insofar as reasonably possible, deliver to Customer such Spare Parts and Standards on dates reasonably calculated to conform to Customer’s anticipated needs in view of the scheduled deliveries of the Aircraft. Customer and Boeing will agree upon the date to begin delivery of the provisioning Spare Parts and Standards ordered in accordance with this Letter Agreement. Where appropriate, Boeing will arrange for shipment of such Spare Parts and Standards which are manufactured by suppliers directly to Customer from the applicable supplier’s facility. The routing and method of shipment for initial deliveries and all subsequent deliveries of such Spare Parts and Standards will be as established at the initial provisioning meeting and thereafter by mutual agreement.
5. Substitution for Obsolete Spare Parts.
5.1 Obligation to Substitute Pre-Delivery. In the event that, prior to delivery of the first Aircraft, any Spare Part purchased by Customer from Boeing in accordance with this Letter Agreement as initial provisioning for the Aircraft, is rendered obsolete or unusable due to the redesign (i) of the Aircraft, (ii) of any accessory, equipment or part thereof (other than a redesign at Customer’s request) [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. Boeing will deliver to Customer at no charge new and usable Spare Parts in substitution for such obsolete or unusable Spare Parts and, upon such delivery, Customer will return the obsolete or unusable Spare Parts to Boeing.
5.2 Delivery of Obsolete Spare Parts and Substitutes. Obsolete or unusable Spare Parts returned by Customer pursuant to this Article 5 will be delivered to Boeing at its Seattle Distribution Center or such other destination as Boeing may reasonably designate. Spare Parts substituted for such returned obsolete or unusable Spare Parts will be delivered to Customer in accordance with the Spares GTA. Boeing will pay the freight charges for the shipment from Customer to Boeing of any such obsolete or unusable Spare Part and for the shipment from Boeing to Customer of any such substitute Spare Part.
P.A. No. 3427
Spare_Parts_Initial_Provisioning
BOEING / UNITED PROPRIETARY
United Air Lines, Inc.
3427-07
6. Repurchase of Provisioning Items.
6.1 Obligation to Repurchase. During a period commencing one (1) year after delivery of the first Aircraft, and ending five (5) years after such delivery, Boeing will, upon receipt of Customer’s written request and subject to the exceptions in Article 6.2, repurchase unused and undamaged Provisioning Items which (i) were recommended by Boeing in the Provisioning Data as initial provisioning for the Aircraft, (ii) were purchased by Customer from Boeing, and (iii) are surplus to Customer’s needs. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6.2 Exceptions. Boeing will not be obligated under Article 6.1 to repurchase any of the following: (i) quantities of Provisioning Items which Customer purchased in excess of those quantities recommended by Boeing in the initial Provisioning Data for the Aircraft, (ii) QEC kits, bulk material kits, raw material kits, service bulletin kits, Standards kits and components thereof (except those components listed separately in the Provisioning Data), (iii) Provisioning Items for which an Order was received by Boeing more than five (5) months after delivery of the last Aircraft , (iv) Provisioning Items which have become obsolete or have been replaced by other Provisioning Items as a result of Customer’s modification of the Aircraft, and (v) Provisioning Items which become excess as a result of a Customer originated change in Customer’s operating parameters, as provided to Boeing pursuant to the initial provisioning meeting and which were the basis of Boeing’s initial provisioning recommendations for the Aircraft.
6.3 Notification and Format. Customer will notify Boeing, in writing when Customer desires to return Provisioning Items under the provisions of this Article 6. Customer’s notification will include a detailed summary, in part number sequence, of the Provisioning Items Customer desires to return. Such summary will be in the form of listings, data files or other media as may be mutually agreed between Boeing and Customer and will include part number, nomenclature, purchase order number, purchase order date and quantity to be returned. Within five (5) business days after receipt of Customer’s notification, Boeing will advise Customer in writing when Boeing’s review of such summary will be completed. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
6.4 Review and Acceptance by Boeing. Upon completion of Boeing’s thirty (30) business day review of any detailed summary submitted by Customer pursuant to Article 6.3, Boeing will issue to Customer a Material
P.A. No. 3427
Spare_Parts_Initial_Provisioning
BOEING / UNITED PROPRIETARY
United Air Lines, Inc.
3427-07
Return Authorization (MRA) for those Provisioning Items Boeing agrees are eligible for repurchase in accordance with this Article 6. Boeing will advise Customer of the reason that any Provisioning Item included in Customer’s detailed summary is not eligible for return. Boeing’s MRA will state the date and shipping provisions by which Provisioning Items listed in the MRA must be redelivered to Boeing, and Customer will arrange for shipment of such Provisioning Items accordingly.
6.5 Price and Payment. The price of each Provisioning Item repurchased by Boeing pursuant to this Article 6 will be an amount equal to 100% of the original invoice price thereof except that the repurchase price of Provisioning Items purchased pursuant to Article 3.2.2 will not include Boeing’s 12% handling charge. Boeing will pay the repurchase price by issuing a credit memorandum in favor of Customer which may be applied against amounts due Boeing for the purchase of Spare Parts or Standards.
6.6 Delivery of Repurchased Provisioning Items. Provisioning Items repurchased by Boeing pursuant to this Article 6 will be delivered to Boeing F.O.B. at its Seattle Distribution Center or such other destination as Boeing may reasonably designate.
7. Title and Risk of Loss.
Title and risk of loss of any Spare Parts or Standards delivered to Customer by Boeing in accordance with this Letter Agreement will pass from Boeing to Customer in accordance with the applicable provisions of the Spares GTA. Title to and risk of loss of any Spare Parts or Standards returned to Boeing by Customer in accordance with this Letter Agreement will pass to Boeing upon delivery of such Spare Parts or Standards to Boeing in accordance with the provisions of Article 5.2 or Article 6.6, herein, as appropriate.
8. Termination for Excusable Delay.
In the event of termination of the Purchase Agreement pursuant to Article 7 of the AGTA with respect to any Aircraft, such termination will, if Customer so requests by written notice received by Boeing within fifteen (15) days after such termination, also discharge and terminate all obligations and liabilities of the parties as to any Spare Parts or Standards which Customer had ordered pursuant to the provisions of this Letter Agreement as initial provisioning for such Aircraft and which are undelivered on the date Boeing receives such written notice.
P.A. No. 3427
Spare_Parts_Initial_Provisioning
BOEING / UNITED PROPRIETARY
United Air Lines, Inc.
3427-07
9. Order of Precedence.
In the event of any inconsistency between the terms of this Letter Agreement and the terms of any other provisions of the Spares GTA, the terms of this Letter Agreement will control.
10. Customer Support General Terms Agreement
Boeing and Customer will make reasonable effort to execute the Customer Services General Terms Agreement (CSGTA) no later than December 31, 2010.
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P.A. No. 3427
Spare_Parts_Initial_Provisioning
BOEING / UNITED PROPRIETARY
United Air Lines, Inc.
3427-07
| Very truly yours, | ||
| THE BOEING COMPANY | ||
| By | /s/ Xxxxxx Xxxxx | |
| Its | Attorney-In-Fact | |
| ACCEPTED AND AGREED TO this | ||
| Date: | February 19, 2010 | |
| UNITED AIR LINES, INC. | ||
| By | /s/ Xxxxxxx X. Mikells | |
| Its | Executive Vice President and Chief Financial Officer | |
P.A. No. 3427
Spare_Parts_Initial_Provisioning
BOEING / UNITED PROPRIETARY
Attachment A to 3427-07
1. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
2. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
P.A. No. 3427
Spare_Parts_Initial_Provisioning
BOEING / UNITED PROPRIETARY
